TennCare Waiver Reform May Shift Health Costs to Other Programs, Hospitals, State Comptroller Says

Gov. Don Sundquist's (R) proposed changes to TennCare, Tennessee's Medicaid managed care program, may shift costs to hospitals and other state health programs, according to state Comptroller John Morgan (Locker, Memphis Commercial Appeal, 11/7). Under Sundquist's Medicaid waiver proposal, TennCare would be split into three insurance pools. Medicaid-eligible beneficiaries would be placed into TennCare Medicaid, Medicaid-ineligible beneficiaries with no access to employer-sponsored health coverage would be placed in TennCare Standard and people who have access to employer-sponsored insurance but cannot afford the premiums would be put into TennCare Assist, which would subsidize premiums. The proposal also would cut from TennCare about 180,000 beneficiaries who are Medicaid-ineligible, a move that would save the state $150 million (Kaiser Daily Health Policy Report, 10/4). The reforms are expected to save the state $155 million in TennCare spending, the Memphis Commercial Appeal reports. However, Morgan told the state Legislature's TennCare Oversight Committee at a Nov. 6 hearing that a "substantial" number of the Medicaid-ineligible beneficiaries dropped from TennCare will likely rely on other state programs, which do not receive federal matching funds, for health care services (Memphis Commercial Appeal, 11/7). In addition, Morgan said the TennCare cuts could harm hospitals by reducing the amount of TennCare reimbursements they receive and simultaneously increasing the amount of uncompensated care they provide, particularly at rural hospitals. To compensate for the lost TennCare dollars, Morgan said hospitals may raise fees for those with private insurance. "The only really effective way to save money in TennCare is reducing the amount of money you pay providers," Morgan said (Lewis, Nashville Tennessean, 11/7).

Savings Unlikely In Short Term
Noting that the state would not see the $155 million in expected TennCare savings until FY 2004, Rep. Gene Caldwell (D), chair of the oversight committee, said medical inflation and enrollment increases would cost the state an additional $200 million in the next fiscal year. Although TennCare Director Mark Reynolds said that he does not believe the program will see the 15% inflation rate expected in the private sector, TennCare's pharmaceutical costs "will have very high growth." To "offset" these costs, Caldwell said the Legislature should be prepared to appropriate an additional $200 million in FY 2003, despite facing a $400 million projected general revenue budget shortfall (Commins, Chattanooga Times & Free Press, 11/7). In other TennCare news, the court appointment of a special master to oversee enrollee "reverifications" will delay the start of the process. While the state was prepared to begin checking eligibility this week, officials will meet Nov. 9 with U.S. District Court Judge William Haynes to "discuss implementation of the reverification process" (Park, Chattanooga Times & Free Press, 11/7).